Bismarck Rewane, Chairman Technical Advisory Committee on Implementation of the National Minimum Wage and Chief Executive Officer & Director at Financial Derivatives, has asked Nigerians to expect an increase in the pump price of petrol.
Recall that In 2016, the Buhari government increased a litre of petrol from N87 to N145, which led to wide criticism of the government.
Rewane made this known in a presentation at the Lagos business school breakfast session, where he stated that there were indications that the pump price of fuel would rise as a result of government working towards reducing subsidy payments.
He said subsidies are a huge drain on government’s revenue, adding that the World Bank put Nigeria’s total subsidy bill in 2018 at N731 billion.
“A gradual reduction in subsidy payments is anticipated. Only N305bn set aside for under-recovery in 2019 budget; expect an increase in the pump price of fuel,” he said.
“Forty per cent shortfall in provision for subsidies (under-recoveries) points to possible price increases.”
Rewane added that a hike in the price of petrol would result in high inflationary pressure.
He described the 2019 budget as counter-cyclical, saying the economy was in dire need of a boost.
He said with expenditures much higher than sustainable revenues, the fiscal deficit had widened by 2.15 per cent to N1.9tn, adding that the supplementary budget could not be avoided.
“Oil revenues are projected to decline due to the impact of OPEC quota on Nigeria’s oil output level,” he added.
Speaking on the new minimum wage, he said internally generated revenue remains the key to funding it, adding that it is not sustainable to rely on the federal accounts allocation committee (FAAC Rewane noted that states civil service accounted for about 1.9 million workers.
Rewane said the capacity of the economic management team will determine the success of President Muhammadu Buhari in the second term.